Blue Label Telecoms launches ADR programme in the US with BNY Mellon to attract international investors
JOHANNESBURG – Thursday, 14 February 2013: Blue Label Telecoms Limited has appointed BNY Mellon, the global leader in investment management and investment services, as the depositary bank for its sponsored depositary receipt (DR) program. Each Blue Label Telecoms DR represents 10 ordinary shares and trades on the OTC market in the U.S. under the symbol “BULBY.” Blue Label’s ordinary shares trade on the Johannesburg Stock Exchange (JSE) under the symbol “BLU.”
Blue Label’s core business is the virtual distribution of secure electronic tokens of value and transactional services across its global footprint of touch points. The group’s strategy is delivered by extending its global footprint of touch points, both organically and acquisitively, to fulfil the significant demand for delivery of multiple prepaid products and services presented through a single interface, across various delivery mechanisms and via numerous merchants or vendors. Core products are prepaid airtime, data and electricity, financial services, ticketing and vouchers.
“This initiative accelerates our efforts in diversifying and increasing our international shareholder base, and enhances awareness of Blue Label’s principle operations in South Africa, the United Kingdom, Mexico and India. The launch, just five years after our listing on the JSE, is an affirmation of our capability and sustainability, while commanding additional stature for Blue Label in the investment community,” says Mark Levy, joint CEO of Blue Label.
“We look forward to helping Blue Label unlock the potential of the U.S. investment community,”says Lauren Czepek, vice president of BNY Mellon in South Africa. “As the world’s leading depositary, BNY Mellon will utilize its many resources to develop a mutually beneficial partnership with the company and its investors.”
BNY Mellon has launched over 60 American Depository Receipt Programs, making South African companies easily tradeable for US investors. “Sun International, Mr Price, Standard Bank, Pinnacle Technology Holdings and Ellies all launched programs in 2012 and there are more in the pipeline,” explains Czepek.
“Investor demand for African stocks is high. American investors buy ADRs rather than foreign ordinary shares as ADRs are ‘wrapped’ to be seen as local investments which institutional and retail investors prefer. Some institutional investors have mandate restrictions that preclude them from investing offshore. The ADR is a vehicle for them to put foreign stocks in local portfolios. It is often cheaper to invest in the ADR due to hefty custody costs and local brokerage costs for investing in the ordinary share. ADRs are also easily accessible in the US via their stockbrokers.” $4.1 trillion of the total $16 trillion US investment is invested in non US equities of which $1.1 trillion is invested in DRs.
BNY Mellon has an 88% share of the South African market including 100% of the telecommunications sector. 35 of the 42 JSE top 40 constituents have an ADR programme and BNY Mellon are the depositary bank for 29 of these.
BNY Mellon has also retained Goldfields, Sappi and Anglogold. These are all US listed programs and subject to US listing requirements costs and regulation. BNY Mellon acts as depositary bank for 5 of the 6 US listed ADR programs. All other programs are unlisted and trade over the counter and are not subject to the substantial costs and regulation of the listed programs. They are at no cost to the issuer and there are also no regulatory requirements.